The productivity and competitiveness of local firms in non-OECD countries depends as much on technological capacities and successful upgrading as in industrialized countries. However, developing countries undertake very little to no original R&D and primarily depend on foreign technology. Long-term contracts and subcontracting arrangements within global value chains are here very important forms of transnational cooperation and therefore also important channels for technology transfer, especially as the majority of these countries attract only limited foreign direct investment. Drawing on innovation and growth models as much as on value-chain literature, we outline an analytical model for empirical research on local firm upgrading in non-OECD countries and technology transfer within global value chains.